How Social Media is Changing What Brands Stand For
Jay Gronlund — March 23, 2017 — March 23, 2017
Our world has never been so divided by politics, with social media as a major catalyst for extreme opinions and reactions. Brands are being pulled into battles on what they stand for, willingly and unwillingly, on both social and traditional media. The driving force behind this disconcerting trend of brand politicization is the increasing vocalization of customer values, which have become so intensely defined and polarized recently, even demanding a particular stance by some corporate brands.
When social media arose 15 years ago, marketers where afraid they would lose control over their brand integrity since the open interaction of customers in the digital world could undermine the intended value and personality of a brand. Smart companies welcomed this digital connection opportunity to more fully engage customers and strengthen their bond with them. It was also a way to “humanize” their brands, creating a distinct brand personality. Traditionally marketers define “value” with a simple formula: benefit divided by the price. Today consumers buy brands not just for the product promises and/or price, but more often for what the brand stands for.
Branding is all about building an emotional connection that leads to trust with targeted customers. However, the trust for many brands (and government) has declined precipitously, causing a rise in protests and even boycotting certain brands. In his book, The Speed of Trust, Stephen Covey writes: “There is one thing that is common to every individual, relationship, team, family, organization, nation, economy, and civilization throughout the world–one thing which, if removed, will destroy the most powerful government, the most successful business, the most thriving economy, the most influential leadership, the greatest friendship, the strongest character, the deepest love…That one thing is trust.”
The favorite medium for expressing such controversial values and political positions is social media (e.g. Facebook, Twitter, etc.). Here are a few examples where political views have had a major impact on the trust and support for certain brands:
- Nordstrom, Neiman Marcus, T.J. Maxx, and Marshalls all dropped Ivanka Trump’s branded product lines in January for apparent business reasons, but the perception by many was that this was due to politics, causing an intense reaction. Sales of her brands actually increased by 346% from January to February (source: Refinery29).
- Uber CEO, Travis Kalanick, dismissed himself from President Trump’s business advisory council after consumers started a movement to delete their app.
- Howard Schultz, CEO of Starbucks, associated his brand with political issues via social media involving the presidential campaign, supporting Hillary, encouraging employees to discuss race relations with customers, and all this caused a major backlash to its brand.
While social media may have exacerbated the politicization of many brands, it has also helped to accelerate the awareness of critical social and environmental issues, even in the investment community. The Morgan Stanley Capital International (MSCI) Index has focused on E.S.G. (environmental, social and corporate governance) features for rating the investment risks and upside potential for many corporate stocks/brands. For example, in the oil and gas category, Statoil from Norway ranks at the top based on its record of spills and low emissions, while Chevron ranks near the bottom due to higher-risk operations and shutdowns.
The overall result has been higher capital growth of those companies emphasizing these E.S.G. elements in their mission and operations. Revenues from MSCI’s research recommendations have been growing by 20% annually as an example. The total amount of assets using E.S.G. factors has more than tripled to $ 8.1 trillion since 2010 (source: US SIF Foundation). This approach for assessing investment opportunities based on E.S.G. features has especially appealed to younger investors (e.g. millennials), who tend to favor sustainability and fossil-fuel divestments linked to climate change.
Another related trend is the increasing power of populists around the world, which brings up a core question being discussed in board rooms–who matters most: shareholders or the people? Or what should a corporate brand stand for today–to only maximize shareholder value or to do more, like give back to society. In 1919 an American court ruled that “a business corporation is organized and carried on primarily for the profit of the stockholders.” Re-defining shareholder value, especially in today’s politicized environment, could have a major impact on the business strategy and personality of corporate brands.
The growing politicization of brands presents a huge challenge for CEOs and CMOs. Should they restrict polarizing posts of their employees on social media, for example? How do they ensure brand integrity when consumers are demanding a particular stance in today’s divisive political spectrum? And how do they continue to encourage customer engagement without risking some alienation of polarized segments?
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